back to article 80% of IT projects in public sector delayed due to IR35 – report

The vast majority of UK government IT projects are suffering delays due to freelancers quitting over the IR35 tax clampdown, according to a survey of contractors. Of 405 IT freelancers surveyed by Contractor Calculator, 79 per cent said the projects they have been working on were delayed as a result of contractors leaving. In …

Anonymous Coward

I think I've got it

Government strategy is to force out local contractors and bring in even more off shoring to ensure even less tax is paid.

Brilliant, I never saw that one coming..... I knew our glorious leaders had a cunning plan, I just hadn't realised quite how cunning it was!

As an aside I hear McDonalds are looking for zero hours workers so everything is cool.

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Re: I think I've got it

"Government strategy is to force out local contractors and bring in even more off shoring to ensure even less tax is paid."

I'm thinking this is to force the little guys out so the big boys get more money.

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Anonymous Coward

Maths

Let's do some maths here, shall we?

48% of contractors left

26% stayed and stayed outside IR35 (half of the 52% who stayed)

7% went inside IR35 but got a rate rise to compensate (13% of 52% who stayed)

19% (remainder) took it on the chin.

So the original projection that 80% would leave if forced inside IR35 is actually pretty spot on. 81% left or stayed outside IR35 or got paid more to stay to compensate for being inside IR35.

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FAIL

Joined up thinking!

To prevent tax avoidance, the government screwed contractors. Contractors have left. Now big consultancies will get the work. Big consultancies use overseas contractors to do the work.

Net result: higher const to government and lower tax income.

Well done.

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Joke

Colour me surprised

Why do I suddenly have a vision of the public sector IT industry doing a 'double-take brother' style jump.

Joke icon, because that's what this is - a joke. If (when?) they roll this out to the private sector, they might want to watch Fight Club. Do *not* fuck with the little people who make your little bits of money disappear and reappear.

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Anonymous Coward

Headline misleading..

Should say 80% of projects contractors are involved in.

None of those I'm involved in are affected because none of them involve contractors specifically to avoid these issues.

These ones are delayed due to incompetent project management and unrealistic expectations :)

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Re: Headline misleading..

"None of those I'm involved in are affected because none of them involve contractors specifically to avoid these issues."

So how are they staffed? Surely not 100% Civil Service. Are they being outsourced and largely off-shored as per the comments above?

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Anonymous Coward

Re: Headline misleading..

You get your freelancers in through an SI, so the SI takes the IR35 overhead. Most of the big departments have been doing this for years. Whether or not you got stiffed by the latest rule changes depends on who was your intermediary. If it was Accenture or Capgemini or Atos you're probably fine - you're part of a large scale delivery contract so there's no IR35 dependency on the department (there is on the SI).

If you were bodyshopped in through Crapita, as many departments did, you were fucked. Wasn't worth Crapita's time to fight your case, and none of their contracts were delivery contracts (they were T&M bodyshops) so you wouldn't have won anyway.

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Re: Headline misleading..

Sounds about right. Why would any self-respecting govt dept want to pay £300p.d. for people when they can pay £1000p.d. and not have to worry about any chance of an under-spend? Especially as your £1000p.d. big brand contractor will be forced to spend most of his/her time doing sales instead of delivery.

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Anonymous Coward

So contractor centric body says "Sky is falling, its the end of everything", while HMRC says "Nothing to see here move along"... I could never have guessed those responses!

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Facepalm

They want to raise £185m a year from contractors? Did they not realise that this would mean that the contractors get £185m less money, or did they think that the contractors would be perfectly happy with this and would not seek to replace that money by avoiding the change, demanding more money, or leaving?

How could this possibly end up not costing them more than the amount 'raised'?

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Anonymous Coward

Numbers.

I just love one of the notes on the draft legislation that was proposed to implement this that said :-

"This measure is only expected to affect 400,000 people" (my emphasis).

400,000. That's significantly close to half-a-million, and they said only? I think they were talking about direct and indirect effects, not the actual number of contractors, though.

I'm not sure if it is still online in the HMRC website. Maybe I ought to hit archive.org.

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Anonymous Coward

Did they not realise that this would mean that the contractors get £185m less money,

Yes, 100% they did. The pea-brained idiots of HMRC and HMT believe that contractors are avoiding paying tax that by rights should be in HMRC's pocket, for the government to waste on all those super things it wastes money on.

Tax avoidance is OK if you're stinking rich, politically well connected, a rich media luvvy, and particularly if you're a huge US corporation, please continue, in fact let's arrange a sweetheart deal over a nice lunch. If you're one of the masses, then TAX AVOIDANCE ISN'T FOR YOU. Your role is to vote for the feckless arsewipes on either side of the House of Commons, and to be persecuted by the bureaucrats of HMRC.

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Facepalm

They never manage to join the dots. Osborne introduced the dividend tax. I now live on savings and just pay into a pension. Net result - I'll probably retire slightly earlier, on slightly less money. Government gets lots less tax.

Idiots.

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Re: Numbers.

£185,000,000 spread over only 400,000 people, is only about £460 per person. That must be pretty close to a rounding error to all involved, except for the additional expenses that are presumably now incurred.

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Re: Numbers.

No, the reason the numbers look so low is that they realised some would just jump ship.

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Re: Numbers.

The reality is that lots of people where I work walked out in advance of the change coming in because as usual there were lots of grey areas in the legislation and the company in question couldn't guarantee anything. Some left the country and went to work in Europe or the rest of the world where at least there is some certainty of tax laws and fewer issues.

Everyone was told they 100% had to switch to Umbrella Companies from Ltd companies. Then somehow, and at the last minute, exemptions and contract changes were made to allow contractors to still be outside IR35 (with recertification every 6 months) and to stay as Ltd companies. The net result is that some of the ones that left have now come back on higher rates and the ones that didn't leave have seen little changed, other than the massive tax rises affecting all contractors (loss of dividend relief, raising of the VAT flat rate scheme etc.)

Move on nothing to see here....

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How could this possibly end up not costing them more than the amount 'raised'?

You missed the government calculations for "Amount Saved". It works something like this:

Year 1 savings: -100%

Year 2 savings: -99%

Year 3 savings: -98%

Year 4 savings following Capita review and increase in contract value as 3% saved: -150%

Year 5: General Election year so Amount Saved revised to "100% saved"

(BTW, this really does happen)

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>The pea-brained idiots of HMRC and HMT believe that contractors are avoiding paying tax that by rights should be in HMRC's pocket, for the government to waste on all those super things it wastes money on.

...like paying contractors?

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[quote]

Your role is to vote for the feckless arsewipes on either side of the House of Commons ...

[/quote]

Well put, but my conscience is clear on that one - and I've been of voting age for 46 years.

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Anonymous Coward

Per cent

Was someone trying to reach their required word count?

Back on the topic. They still insist of screwing over the little people and ignoring the big people like Google etc. Yes, I know it's harder than it sounds going after them. With Google threatening to leave the UK if it means having to pay more tax but still annoying.

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Anonymous Coward

Re: Google leave the UK?

Please go. As you apparently don't do any [cough,cough] business here then why are you here at all?

And that large building in Farnborough that has Alphabet on the front (it is also shared with BMW) Remember who was there before you... Nokia and we know what happened to them.

And you can take Amazon with you unless you want to pay taxes like the rest of us plebs.

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Re: Per cent

Pretty sure it's established el Reg style to use per cent in body copy, with the symbol in headlines. Not my preferred style, but it seems to be applied consistently.

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Re: Per cent

Or, even more correctly, per centage, or percentage.

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Anonymous Coward

Re: Per cent

I think you'll find 'per cent' is the standard British English form.

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Re: Google leave the UK?

@AC Becareful what you wish for.. if they have to pay the correct amount of tax, then they'll use that an excuse to raise prices, follow by a press release stating "Due to increase overheads within the UK, a price increase is required to offset the differences!"..

These companies have one rule - Placate the shareholders..

Shareholders have one rule - Screw everybody to get maximum return

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Re: Per cent

Bugger. I've been using 'percent' all my life. Oh well.

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Anonymous Coward

Re: Google leave the UK?

Erm, that Alphabet is a car leasing company owned by BMW.

Nothing to do with Google, apart from deliciously refusing to let them have alphabet.com.

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Re: Google leave the UK?

Pretty sure Alphabet in Farnborough are some car leasing company, nothing to do with Google.

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Re: Per cent

"the standard British English form"

So the standard English form then. It's the original so needs no qualification.

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The duty to pay taxes ...

is something that middle class people must do. It is not a burden that is to be felt by the very rich or by large corporations.

If large corporations were made to pay taxes just like the rest of us: where would all those nice consultant type jobs come from once MPs and top civil servants retire ?

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When is someone in HMRC going to admit that the Income Taxation structure in the UK is no longer fit for purpose.

The method of engagement of workers has vastly changed since National Insurance was introduced 106 years ago, and even since PAYE in 1944. Instead of making up stupid schemes to block the "loopholes" that have emerged, re-write the entire structure such that all earnings are taxed on an equal basis.

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Downside of that is that pensioners don't pay NI, but they do pay income tax.

The problems were made worse when Gordon Brown decided that rather than increase income tax, he'd increase NI instead. People are much more aware of income tax rates than NI.

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Facepalm

@Velv, yeah, but how the hell are you going to do that? It's impossible.

https://en.wikipedia.org/wiki/Economy_of_Estonia

@AMBxx

And don't forget employers NI. If your employer didn't have to pay it, you could have it instead. It's a total smoke and mirrors thing. It also means that directors who are shareholders can avoid NI completely, and still get their stamp by taking a small salary, receiving the rest of their compensation out of the business in dividends. Now, IMO, maybe people who set up companies and employ people deserve a tax break, but why do it in such a hidden, underhand way?

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Instead of making up stupid schemes to block the "loopholes" that have emerged, re-write the entire structure such that all earnings are taxed on an equal basis.

Define "earnings".

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80% of IT projects in public sector delayed due to IR35

I was about to start a bout of uncontrollable laughter, but then I remembered two things:

1. Although some of these projects would've never delivered or were for pure vanity or just plain misguided, some would've offered real value, benefits and transparency to people; delays cost money, so this is not good for the country.

2. IR35 is a worrying, spiteful and stressful tax. HMRC have defined it so loosely, and have continued to move the goalposts that no-one can sensibly plan for it. Gordon Brown needs to slowly die of a painful disease and rot eternally in hell for bringing in this and other taxes - he's smothered the UK technical base, and subsequent governments for some reason continue to press the pillow firmly down.

All those people who have elected to no longer work on these projects must find work elsewhere, and whilst there will be a proportion of useless ex-barista web 'developers' that won't be missed, there will be some very smart people who will take their brains and knowledge elsewhere.

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Anonymous Coward

Re: 80% of IT projects in public sector delayed due to IR35

Disclosure: I am not a contractor. But when I need something done quickly, correctly and elegantly, a contractor is what I need. Not a low paid junior in an off-shore location. Not a team of idiots from CSC, HPE, IBM, ...

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Anonymous Coward

Interesting side-article to be aware of in the Telegraph.

http://www.telegraph.co.uk/news/2017/09/03/thought-got-away-parking-fine-think/

The Ministry of Justice are using access to new technology, i.e. Credit reference agencies, Government Databases and online tracing tools to chase historical fines, some over 10 years old, that were never paid, often where the person has since thrown away any documentary evidence.

Worth a read. Not directly connected, but does show what being a contractor to the Government currently entails, stitching people up for past mistakes because they now can, off the back of so called terrorism "to protect us" / to keep us safe aka even more monitoring.

It's the typical information/privacy land grab on information, that should be never used for such purposes, well certainly not retrospectively. You may have decided at the time, that the risk of getting a ticket was lower.

I wouldn't mind but most of us have enough to deal with trying to legally / stay out of bus lanes, keeping below speed limits 'today', when we are just trying to earn a crust.

I'm now wondering what methods they will be using retrospectively in 10 years time and modifying my ways accordingly.

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"There is no evidence of a drift from the public sector and no delays to IT projects due to the new rules."

Plenty of delays because of things such as spec changing, unrealistic expectations etc but we wont comment on that.

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Devil

80% of IT projects in public sector delayed due to IR35 – report

Bwhahahahahahahahahahahahahahahahahahahahahahahahahaha(gasp)hahahahahahahahahahahahahahahahahahahahahahahahahahaha(wheeze)hahahahahahahahahahahahahahahahahahahahahahahahahahaha(croak)

Stop it, you're killing me, I can hardly breathe for laughing. Government takes aim at foot, pulls trigger, and hits the target.

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and hits the target

Government takes aim at foot, pulls trigger, and hits the target.

Only target they have hit.

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complete hypocrisy on this comments page

Reg commentards: "Oh fuck off then google. threatening to leave because we want you to stop your dodgy tax loophole arrangements well GOOD"

Also Reg commentards: "they think IT contractors aren't paying tax? just because i pay myself dividends from a company in the caymans which is also me? well i am absolutely flabbergasted and shocked at the sheer cheek of it! i'll just leave and THEN see what happens GATHER THE PITCHFORKS MEN"

IT contractors in "everyone should pay tax except IT contractors" shocker

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Re: complete hypocrisy on this comments page

Commentard in "everyone is wrong except me" shocker.

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Facepalm

Re: complete hypocrisy on this comments page

"IT contractors in "everyone should pay tax except IT contractors" shocker"

Nope. IT contractors in "We should only have to pay the tax we actually owe" shocker. The Government is trying to have their cake and eat it, as usual. The Government is trying to claim that some companies are different to others. There's no legal basis for this, the Government just decided overnight that lots of small companies, each of them paying their full tax burden, were somehow trying to defraud HMG and that there was more to be wrung out of these companies by treating the entire company income as a salary paid to an individual. Not only that but the individual would also have to pay employer's NI as well as the employee contribution. Claiming that all IT contractors operate illegal tax avoidance scams with companies in the Caymans is simply defamation.

This from a government that lets giant companies operate without paying taxes in the UK, they also pay massive subsidies to those companies to stay in the UK, no doubt swayed by the contributions to party and individual MP funds that they receive from those companies.

The Schadenfreude is because the Government were warned that any attempt to crack down on IT contractors and impose unjust taxation would see many simply leave. They poo-pooed that idea, and as ever with government they only see the mess when their nose is rubbed in it.

I gave up government work three years ago when it was made obvious that they were going ahead with this nonsense. Since then my day rate has doubled and I now get to spend more time doing what I like, both at work and in my leisure time. The Government would have to pull some astonishing rabbits from their hat to entice me back.

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Re: complete hypocrisy on this comments page

the government is trying to have their cake and eat it by treating you as an individual instead of a company?

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Re: complete hypocrisy on this comments page

Not instead of, as well as.

Just because they decide to tax your company earnings as your salary, doesn't remove the need to pay Employer's NI or to pay your accountant or to pay VAT etc etc etc.

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Re: complete hypocrisy on this comments page

"they only see the mess when their nose is rubbed in it."

Or not even then.

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Re: complete hypocrisy on this comments page

"to pay VAT"

Not pay it but collect it, free of charge, on behalf of HMRC.

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Re: complete hypocrisy on this comments page

"the government is trying to have their cake and eat it by treating you as an individual instead of a company?"

No, the government is trying to have their cake and eat it by treating a company as if it were one of the employees of the company, when it suits them and treat a company as a company when it suits them.

For reasons that are bizarre the government chooses not to tax a company as an entity in the same way that people are taxed. Thus it's the government fiddling the tax system.

If the government wished, it could apply a level tax structure with the same taxation rates on profits, share dividends and income tax. However the government wants to give some companies a big tax break and some shareholders a big tax break. What it doesn't want is for those tax breaks to be available to the inferior middle classes. Hence the attempt to treat small companies differently from the ones that employ MPs as "consultants" or directors.

As a consultant one has to pay every penny of tax owed or face fines/criminal charges. What government is trying to do at present is to fool people into thinking that small companies are doing something illegal or immoral when they do neither.

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Boffin

FanSaaStic!

This shows the benefits of deploying SaaS like Office 365 and Salesforce.com, it's all there for you with a few clicks. No expensive contractors needed!

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